Problem: Marginal revenue product is defined as the change in total revenue that results from the employment of an additional unit of a resource. A producer wishes to determine how the addition of pounds of plastic will affect its MRP and profits. See the table below, and answer each of the questions.
|
Pounds of plastic (quantity of resource)
|
Number of assemblies (total product)
|
Price of assemblies ($)
|
|
0
|
0
|
-
|
|
1
|
15
|
13
|
|
2
|
30
|
11
|
|
3
|
40
|
9
|
|
4
|
55
|
7
|
|
5
|
58
|
5
|
1. The marginal product of the 3rd pound of plastic is ________.
2. The marginal revenue product of the 3rd pound of plastic is ______.
3. The price of plastic is $135 per pound. To maximize profit, the producer should produce __________.
4. The price of plastic is $135 per pound. To maximize profit, the producer should buy and use: __________.